Communists and Keynes.

Why do some communists love the economic theories of Keynes? For starters Keynes was a supporter of capitalism and his economic theories had one purpose; to strengthen and not weaken the capitalism system.

So what did Keynes think of Marx?Marxism "was founded upon nothing better than a misunderstanding of Ricardo", and, given time, he, Keynes, "would deal thoroughly with the Marxists" and other economists to solve the economic problems their theories "threatened to cause.” Yeah right!In 1931 Keynes went on to write the following on MarxisismHow can I accept the Communist doctrine, which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values.Scratch him of your Xmas card list eh?But what of Keynes and his economic theories? How successful were they are solving the problems caused by capitalism and how do they aim to do this?

When capitalism is in crisis the Keynesians believe that they have the answers to solve the crises. They have two key policies. The first is to cure unemployment and the second is to cure inflation.

The cure for unemployment is for the government to spend a lot more money, without an increase in taxation. The Government raises the rest by borrowing from investors which increases the national debt. It is called running a budget deficit.

The other policy is to cure inflation. This requires the government to do the opposite by running a budget surplus. This surplus is then used to reduce the national debt.

Regarding the 2nd policy that would mean cuts! What, you mean you didn’t know that? Yes, when the time is right the Keynesians are in favour of cuts.

Keynesians do not face up to the fact that the government cannot increase government expenditure (which Keynes advocated as a means of causing an expansion of the economy) without getting the money from somewhere.

But where does this extra money come from?

Taxation? The problem with this is that if you raise more money by taxation it enables the government to spend more but it reduces the spending power of the people who have to pay the increased taxes. Strike one!

Bonds & Securities? Well, yes you can raise the revenue could be obtained by selling government securities to investors. But this also reduces the ability of investors to spend just like increased taxation. As if they are buying government securities they cannot spend that money twice! Strike two!

Government borrowing? Selling treasury bills? But to pay for these Treasury Bills the banks have to call in loans they have made in the money market. The money market then has a traditional “right” to go to Threadneedle Street and to borrow from the Bank of England. So you call in loans you made to other investors and hand that out to a new set of investors. Strike three! Keynes is out!

But of course we know from history that none of this works, in the end you still end up with inflation and unemployment, the very things that the Keynesians claim they solve.

As in 1976 after years of Keynesism in the UK, James Callaghan finally admitted this stating:

"We used to think you could spend your way out of recession and increase employment by boosting government spending I tell you, in all candour, that that option no longer exists. And in so far as it ever did exist, it only worked on each occasion… by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step…”So we don’t owe Keynes any favours. Even Milton Friedman is on record as saying “I find myself in almost total agreement with Keynes”. So for those on the left that dig Keynes, why not go the hog and become a monetarist? What is it about Keynes that they admire so much? His bankrupt ideas? His hatred of Marx & Marxism? His support of the capitalist system? Any ideas?

Its all relative. In many ways Keynesianism can be seen as the ideology of State Monopoly Capitalism that emerged after the Depression and WW2. The 1945-1973 period of Capitalism was a mix of the Cold Warrior Stick and the Welfare State Carrot on the working class. And it did not come all from above, but through genuine hard-won victories of the Labor movement. That is a legacy worth defending on a tactical level, from the Neoliberals who want to return to the social darwinism of the 19th century.

While Keynes himself was a Classical Liberal, several of his colleagues who formed the Post-Keynesian school were very progressive. Michał Kalecki would work for the Polish state and Joan Robinson supported Mao Zedong. This branch of Left-Keynesianism had a strong influence on Sweezy and Baran's Neo-Marxian analysis of Monopoly Capitalism.

Its all relative. In many ways Keynesianism can be seen as the ideology of State Monopoly Capitalism that emerged after the Depression and WW2. The 1945-1973 period of Capitalism was a mix of the Cold Warrior Stick and the Welfare State Carrot on the working class. And it did not come all from above, but through genuine hard-won victories of the Labor movement. That is a legacy worth defending on a tactical level, from the Neoliberals who want to return to the social darwinism of the 19th century.

While Keynes himself was a Classical Liberal, several of his colleagues who formed the Post-Keynesian school were very progressive. Michał Kalecki would work for the Polish state and Joan Robinson supported Mao Zedong. This branch of Left-Keynesianism had a strong influence on Sweezy and Baran's Neo-Marxian analysis of Monopoly Capitalism.

Great mention of Kalecki. My understanding is that Kalecki was a Marxist who independently developed many of the same ideas Keynes did but because he did not publish in English and because he was more radical politically, Keynes got most of the credit.

I think Kalecki's article "Political Aspects of Full Employment" is an absolute must read (see link below). Kalecki also wrote some interesting articles on socialist planned economies. From what I remember, he was critical of the extreme emphasis on capital goods production and believed more attention needed to be paid to developing a stronger consumer goods sector. Kalecki also supported worker's councils as a way to bring some form of worker participation and economic democracy to the Polish economy, although Kalecki remained a supporter of planning and opposed market socialism. I sometimes wonder if Polish socialism would have been more successful if Kalecki's ideas had been listened to instead of ignored by the Polish leadership.

I agree that some Left-Keynesians can be our friends. Many of them are very critical of capitalism as a system for both practical and moral reasons. Some of them are comfortable with Marxism, but not all of them are. Some left-progressives still feel the need to proclaim their total anti-Marxism to avoid being labeled as "extremist."

Every communist party in the UK argues for higher taxes and increased government spending...whilst at the same time telling us that the state is not neutral in the class war and supports the capitalist class. So on the one hand they tell us the state is our enemy and on the other we must increase it’s funding.

We must tax the rich. We must spend surplus on welfare. There should be 50% capital gains tax like what they do in Scandinavian countries. They always have budget surpluses which means Keynesian theory works.